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Contributions and Constraints of NGO-Led Income Generation
Activities (IGAs): The Case of SOS Children's Village Ethiopia, in
Woldia City
Muluneh Demissie Sisay
Woldia University, Sociology Department, Woldia Ethiopia
DOI: https://dx.doi.org/10.47772/IJRISS.2025.910000319
Received: 14 October 2025; Accepted: 22 October 2025; Published: 11 November 2025
ABSTRACT
This study examined how SOS Children’s Village Ethiopia’s family-focused “credit-plus” income-generating
activity (IGA) model contributes to household wellbeing in Woldia City and identified contextual constraints
limiting its sustainability. Using a qualitative approach across three kebeles in North Wollo (Amhara Region),
data were collected through 10 in-depth interviews with IGA clients, 6 key-informant interviews with project
staff, and focus group discussions with cooperative and individual participants. The findings revealed that the
SOS program improved access to revolving funds through savings-and-credit associations, enhanced
entrepreneurial and technical skills via training and coaching, and promoted women’s economic empowerment
by strengthening decision-making power, confidence, and income control. The study also confirmed positive
outcomes such as improved saving culture, asset accumulation, and children’s wellbeing. However, several
challenges constrained program impact, including limited motivation among some clients, high opportunity costs
causing training dropouts, small loan ceilings restricting business growth, workspace shortages, bureaucratic
delays, and weak market access. Conflicts within cooperatives and enforcement risks further undermined
progress. The study concludes that credit-plus IGAs yield tangible livelihood and empowerment gains when
complemented by secure production spaces, responsive governance, market linkages, and progressive financing.
Strengthened cooperative governance and flexible, time-sensitive training are recommended to enhance
sustainability.
Keywords: NGOs; income-generating activities; livelihoods; women's empowerment; savings groups;
qualitative research; Ethiopia; Woldia City.
BACKGROUND OF THE STUDY
Non-governmental organizations (NGOs) have expanded globally over the past half-century in response to
persistent social and economic vulnerabilities that states have struggled to resolve alone. Early scholarship
attributes this growth to the need for agile, community-rooted actors who can reach populations beyond the
adequate coverage of public systems (De Waal, 1997). In Ethiopia, the contemporary NGO sector is relatively
young, with modern forms emerging only in the last four decades (Desalegn, 2008). Historically, however,
Ethiopians have organized mutual aid through enduring self-help institutions,now often formalized as
community-based organizations, which prefigured many of the functions that NGOs perform today (Van, 1998).
Moreover, the earliest NGO-like activities in Ethiopia can be linked to the urbanization and economic shifts of
the 1930s, which gave rise to new civic organizations alongside state structures (World Bank, 2000; Islam &
Sultana, 2005).
From a functional standpoint, NGOs are often credited with comparative advantages over governments. They
can deliver services at lower cost to hard-to-reach groups, respond rapidly and flexibly to changing needs, and
leverage deep familiarity with local social dynamics (Suharko, 2007; Riddel & Robinson, 1995, as cited in Daina,
2012). Furthermore, NGOs often expand access to critical services,such as health, education, and
livelihoods,particularly where state provision is limited or uneven. In addition, their experience with small-scale,
participatory projects positions them to co-produce development outcomes with communities, not merely for
them.
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Ethiopia's civil society landscape grew markedly in the latter half of the twentieth century. Charities and societies
began to proliferate in the 1950s and 1960s and expanded significantly after the devastating 1974 drought, when
humanitarian and development assistance surged (SCI, 2016). Over the past two decades, the number and scope
of civil society organizations (CSOs) have increased significantly as they have mobilized international funding
to support national development priorities. Besides this expansion, the sector's composition diversified to include
both international NGOs and national entities with localized reach. Nevertheless, despite visible contributions,
many NGOs face structural constraints that threaten program continuity. Funding streams are often short-term
and earmarked, making it challenging to sustain longer trajectories of Change or invest in institutional capacity
(CSO Sustainability Index, 2011). Furthermore, a heavy dependence on external donors can lead organizations
to prioritize resource acquisition over mission-driven programming (Hailegebriel, 2014).
Poverty and livelihood insecurity provide the immediate context for NGO engagement in Ethiopia. Like many
low- and middle-income countries, Ethiopia continues to face challenges related to limited employment
opportunities, income volatility, and spatial disparities in access to essential services. Wolday (2004) notes that
insufficient finance is a binding constraint on household production and productivity; formal financial services
remain out of reach for many, pushing vulnerable families toward informal lenders and ad-hoc coping strategies.
Additionally, urban and peri-urban households frequently cite high unemployment, weak market linkages, and
limited safety nets as barriers to economic mobility (NDA, 2013). These structural gaps make income-generating
activities (IGAs) an attractive intervention domain for NGOs seeking to pair immediate relief with pathways to
self-reliance.
Within this space, NGOs deploy a range of livelihood tools, including start-up training, coaching, savings groups,
microloans, market linkage support, and asset transfers. Furthermore, the literature suggests that "credit-plus"
models, finance combined with skills and mentoring, tend to outperform finance-only approaches in terms of
income gains and resilience (Srinivas, 2015). Yet the IGA field is not without controversy. According to Srinivas
(2013), NGOs that pursue domestic fundraising or commercially oriented ventures can blur boundaries between
charity and enterprise, potentially distorting markets or diluting mission focus. In addition, evidence from
Ethiopia suggests that many organizations face challenges in launching and sustaining IGAs due to financing
gaps, limited technical capacity, regulatory hurdles, and infrastructure deficits (Denko, 2012; Dagne, 2013).
Even when interventions show promise, such as diversified income and asset accumulation, as documented in
specific programs (Desta, 2013),questions linger about their scale, durability, and cost-effectiveness (Getachew,
2017).
Woldia City hosts a mix of low-income households facing employment instability, thin capital markets, and
constrained access to formal financial services. Against this backdrop, SOS Children's Village Ethiopia has
implemented IGA programming designed not only for individual earners but for entire families, seeking to
stabilize household economies and improve child wellbeing. The present study emerged from practitioner
observation during a government-NGO forum in Woldia, where SOS's approach, grounded in savings-led
finance, enterprise coaching, and market facilitation, appeared to address precisely the bottlenecks local families
reported: start-up capital, business skills, and predictable market access. Moreover, discussions with clients and
frontline staff highlighted cross-cutting constraints,land and workspace scarcity, inconsistent stakeholder
responsiveness, and Training dropout due to daily wage pressures that warranted systematic examination.
Despite a growing literature on Ethiopian NGOs and livelihoods, several gaps persist. Prior studies often
aggregate findings at the national level or focus on Addis Ababa, which limits the external validity for secondary
cities such as Woldia (Srinivas, 2013; Hailegebriel, 2014; Dagne, 2013). In addition, relatively few analyses
disaggregate the IGA value chain, from savings mobilization to enterprise performance, while simultaneously
accounting for institutional constraints and local governance interfaces. Furthermore, while organizations like
the Women's Association of Tigray (WAT) demonstrate the potential of multifaceted poverty reduction
strategies (Mebrhatom, 2012), there remains limited qualitative evidence on how family-focused IGA models
affect women's decision-making power, saving habits, and children's risk profiles in smaller urban centers.
Taken together, these considerations justify a focused, qualitative assessment of SOS Children's Village
Ethiopia's IGA program in Woldia City. The study situates SOS's contributions within Ethiopia's broader NGO
trajectory and tests how a credit-plus, family-oriented model operates under real-world constraints. In addition,
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it examines the interplay between program design and the enabling (or limiting) environments of finance,
markets, land, and local administration to derive practice-relevant lessons. Furthermore, by foregrounding the
perspectives of both clients and implementers, the research aims to illuminate both the pathways through which
IGAs translate into empowerment and the friction points that dilute their impact. Ultimately, the study
contributes to closing methodological and knowledge gaps on NGO-led livelihoods in secondary urban contexts,
offering evidence to inform program refinement and local policy coordination.
This research, therefore, would contribute to the existing scarce literature by assessing and evaluating the
contribution and challenges of SOS in creating income for vulnerable families.
MATERIALS AND METHODS
The study was conducted in the Amhara Region, specifically in the Northern Wollo Administration Zone, within
Woldia town.Woldia, the capital of North Wollo, is located 521 km north of Addis Ababa and 360 km south of
Bahirdar, the capital of the Amhara Region. (WCAMO, 2009). This study area was selected based on the
researcher's personal experience and familiarity with that place. The intended study employed qualitative
approaches to attain its objectives. The researcher primarily used the qualitative method in this study because
data related to the contribution of SOS can be collected by considering the views and opinions of the
organization's clients, staff members currently working in the IGA department, and various stakeholders. Thus,
views of clients regarding the organization's contribution, challenges faced by the organization and its clients in
the IGA program, as well as the organization's success, can be collected adequately through a qualitative
approach.
The study area selected for this assessment is SOS Children's Village Ethiopia, located in Woldia Town, Kebele
01, 02, and 03. The study targets are vulnerable families who are engaged in income-generating activities
provided by SOS. The site is selected purposefully because the organization is established and works with highly
vulnerable families and children who have resulted from a lack of income and various problems. The researcher
conducted ten interviews. An unstructured interview guide was developed to collect qualitative data. In the data
collection process, during interview sessions, clients, stakeholders, key informants, and staff would be
interviewed. Different types of interview guides were prepared for clients, key informants, for staff members
and for stakeholders. All tools would be prepared in English and it will be translated into Amharic before the
interview. The researcher conducted ten in-depth interviews with clients who were involved in various business
activities.
All interviews would be conducted at the office of the organization, arranged by key informants. Besides, A total
of six key informants would be interviewed. The informants are the project coordinator, project officer and staff
of SOS woldia program office. The significant issues for Discussion include the organization's contribution to
the IGA program, the challenges faced by the organization, and the contributions of different stakeholders.
Furthermore, focus group discussion sessions would be held with clients of the organization, including individual
business owners. All the data from interviews and FGDs would be collected in Amharic using handwritten notes
and partly voice recordings. After the completion of the data collection, field notes will be organized and
translated into English. The recorded voices were then transcribed and translated point by point. After
transcribing the audio recording and verifying the validity of the data gathered through all techniques, themes
related to the research questions selected and the analysis were identified. The findings would be discussed
through thematic analysis by triangulating data from interviews, FGD and observation
RESULTS AND DISCUSSION
This chapter presents the socio-demographic information of the research participants, as well as the findings and
Discussion of the study, including the contributions of SOS in creating income, the challenges SOS faces in
addressing economic problems, and the challenges clients face in undertaking their business within the IGA
program.
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Descriptions of the Study Participants
As clearly indicated in the demographic data, the total number of study participants in this research is 40,
comprising individuals from Admas Bashager, Tinfaz, and Debre Gelila kebeles, as well as SOS officers. The
researcher attempts to triangulate the data gathered from in-depth interviews with key informants and Focus
group discussants. The sex distribution of respondents showed that the majority of study participants are women.
The reason for the higher proportion of women in the sample size is due to the nature of the activity, which is
mainly run by sex-focused activities, especially emphasizing women. In terms of marital status, a great number
of research participants are divorced. This led to a double burden for females in caring for and fulfilling the
household economy.
Contributions of SOS in Creating income for economically vulnerable families
The study confirmed that the organization helps beneficiaries associate themselves with credit and savings
associations. When clients join this association, they are expected to save at least birr 50. Members of the
association may save as much as they can, even by competing with their friends. These clients can receive loan
from this association. The more money each member saves, the larger the amount of loans they can access.
Credit and savings associations enable vulnerable individuals to access funds that would otherwise be
inaccessible through commercial banking. This kind of intervention to solve the problems of people with low
incomes and assist them in improving their family living is very important at both the individual and community
levels.
Besides, the key informants pointed out that the organization doesn't make direct investments or provide credit
to either individuals or cooperatives. Instead, it assists the credit and savings association under the organization
by depositing seed money into their respective account to create a revolving fund for its members. A focus group
discussant from 01 Kebele strengthened the above idea as follows:
"The organization trained me to start a business on urban agriculture, specifically to grow vegetables. Since I
do not have enough capital to purchase various materials that support my business, the organization has
purchased water tanks and drip irrigation materials on loan. I can say SOS did a lot for me."
The research participants confirmed that the organization is contributing to both individuals and cooperatives to
help them achieve better results. A key informant from Admas Bashager kebele pointed out the contribution of
SOS as follows:
"To start our business, the organization gave us a production area in its own compound. There we started our
business. Both the SOS and the kebele officials facilitated our access to shade. To appreciate our activity
(achievement), they presented us with a chopping machine. This machine has reduced the time and effort wasted
on manual chopping. If this organization does not facilitate for us, it looks impossible to me to run this business."
Major Contributions of SOS in creating income for vulnerable Groups
Encouraging new enterprises involves providing advice, technical support, information, and resources to help
individuals establish their own businesses, such as sole proprietorships, partnerships, cooperatives, or
community enterprises, in various agricultural, industrial, or trading fields. Micro-enterprise financial support is
crucial for enabling businesses to start up, as they often cannot access traditional financial institutions (Ghous,
2004).The research participants mentioned as SOS is contributing in various ways in IGA program. Among
these, providing different kinds of Training, formulating credit and savings associations, offering technical
support in guiding income generation, creating market linkages, and following up on clients' activities are the
major ones.
According to the discussants, the significant forms of contributions that the organization has been providing
include empowering women economically and physically, creating employment for PLHIV parents and
caregivers of orphan and vulnerable children, as well as vulnerable youth. Income generation varies from one
organization and project to another. Here, we have chosen to understand IGA as an economic activity pursued
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to improve the living conditions of the Project area. This may involve the production of goods or services,
including commerce or a combination of both, in both rural and urban areas. Activities will often be group-
based, although this is not always the case (Sonderriis and Zapata, 2000).
The following sub section explores the major contribution of SOS in creating income for economically
vulnerable families.
Economic empowerment
Empowering women by increasing their income and control over household resources (including their own
income), enhancing their knowledge and skills in production and trade, and increasing their participation in
household decision-making. As a result, social attitudes and perceptions may change, and women's status in the
household and community may be enhanced (Johnson and Rogaly, 1997). The study's findings revealed that the
SOS program enhanced women's participation in decision-making and increased their self-confidence. In line
with this study, the female research participants narrated that the SOS provides different kinds of Training that
enable their business to function. For example, basic business skill training and leadership training help these
clients develop the necessary skills and become competent in the business world.
The entire group of research participants maintained that they had taken different kinds of Training, and this
Training had changed their knowledge of business. Besides the focus group discussants, it was mentioned that
the SOS project coordinators need to arrange a way to generate income for its clients; formulating market linkage
for them is essential. However, the organization found that the existing links to market access were not enough,
especially for individual business owners. It is better to share experiences from other organizations engaged in
a similar activity about market linkage and apply them in this organization. Thus, the informants confirmed that
by conducting market assessments, the organization attempts to formulate market linkages to make the
cooperatives profitable. Such cooperatives serve as a model for others in income-generating activities and help
them become independent. Getachew (2017) mentioned that income-generating activities are the productive uses
of an asset for income generation, providing the opportunity for higher incomes, greater dignity, and a
strengthened ability to cope with Shocks. One of the key informant interviewees at Tinfaz kebele strengthened
the above idea as follows:
"I first came to this organization because I suffered from a disability and could not take care of my three children.
I had no one to look after my family. When I recovered from my illness, the organization gave me Training. I
decided to start a small business activity of selling bars of soap. Now I pay birr 1000 monthly an 'equb'. I can
afford the monthly house expenses of birr 800 per month. When I compare my life with previous one, now I am
independent and economically empowered."
The following narration from a key informant in Debre Gellila kebele confirmed the positive impacts of SOS on
the economic empowerment process of vulnerable groups.
"Six years ago, my family's income was dependent on my husband. When he fell ill, my family had nothing to
eat. I came to this organization seeking help. The organization provided me with Training, and I obtained a loan
from my association. Afterward, I began selling charcoal. Besides, I started baking 'enjera' and selling it. Now
my capital has grown. I started paying house rent, covering all household expenses, by myself. I have built a
house. I now have Birr 50,000 in my bank account, and I expect to receive Birr 60,000 from 'ekub'. I am now
self-sufficient, economically well empowered to expand my business."
The FGD discussant explained that she has benefited from the SOS economic empowerment package like this;
"After being included in this cooperative, we are now independent and we don't seek any help from other
individual. Joining the business gave us the chance to improve our living standards. The monthly income we get
provided us a stable source of income that allowed us to live better life when compared to previous one and we
are now able to feed our families, rent house and bought different house materials."
In line with these findings, the study conducted by Desta (2017) revealed that the IGA program has had a positive
impact on income diversification, asset creation and ownership, and the general well-being of the household.
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Awareness on work
The research participants confirmed that most clients who come to the organization do not have any work
experience or Training. Some of them are dependent on their family's income, and others are beggars. To create
work awareness, the organization provides Training on various activities related to business operations. Both the
key informant interviews and focus group discussants pointed out that there has been a noticeable change in
work habits since they received Training from SOS. The following statement by the discussant from Admas
Bashager kebele supports this idea as ;
"I was a beggar. I look in the hands of people for my living. I have no work. It looks impossible to me. Instead
of working, I prefer begging, as it is easy to make a living. I came to this organization looking for help. They
gave me advice to change my attitude. I had Training and then started a small business. Now I can sustain myself
and my family from this business."
Similarly, the following story of a key informant from Tinfaz kebele may strengthen the above notion:
"I was dependent on my family's income. I have no job. Going outside and working looks impossible to me. Until
I joined this organization, I wasn't convinced to work and help myself. With the Training and advice given to me
now I am working and sustaining myself and being exemplary to other individuals like me."
Accordingly, Training is one of the non-financial services benefits. The trainings were focused on IGA activities,
sheep production, and savings. During the focus group discussions, most participants reported that the Training
delivered by GOAL was relevant and helpful in ensuring the sustainability of the program.
Change in saving habit
According to the study conducted by Thomas (2018), Training on IGA, saving, cash box, and registration book,
as well as close follow-up and technical support, was provided throughout the program's life. As a result of this
approach, the saving culture of the members was enhanced, social bonding among member groups increased,
business skills and knowledge improved, and enabled members to engage in income-generating activities
(IGAs). In addition to enhancing the savings culture and creating access to loans, this off-farm activity (IGA)
significantly contributed to household asset protection, specifically by reducing asset depletion and creating
household assets, as confirmed by respondents. As one of the interviewed workers said, the clients should save
a minimum of birr 10 per month in a credit and savings association within their client group. Mainly, this helps
them borrow four times the money they saved. Additionally, it encourages the client to develop a habit of saving.
As he said, since these clients do not have any information about the importance of saving at the beginning. In
an interview conducted with research participants on the Change in their saving habits some of them said the
following.
Before I joined this organization, I had saved nothing in my life. With the advice I received from this
organization, I started saving birr 50 per month. I found that saving changed my business, and I increased my
savings. Additionally, I now have savings through my association. I have saved Birr 15,100 in my account at a
commercial bank. After I started saving, I feel more secure.
In support of the current study, Desta's (2017) findings indicate that the role played by non-government
organizations has increased households' income, diversified their sources of income, and improved their savings
practices due to the benefits they receive from the project.
Reduction of Risk to Children
Another study (Aoki et al., 2002, cited in Assefa, 2004) confirmed that a lack of educational opportunity is one
of the most powerful determinants of poverty, and unequal access to educational opportunities is strongly
correlated with income inequality. The provision of relevant education makes a significant contribution to
poverty reduction efforts. The evidence from Assefa's (2004) study revealed that educated farmers are more
likely to adopt new technologies and receive higher returns on their land. Even if the SOS project does not have
direct access to education, the school attendance shows an increase. It is assumed that the other elements of the
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intervention such as health facilities, access to water, and livelihood support, played a significant role in
increasing school Attendance or access to education support.
As a key informant, one said 'Women are the primary social capital for one family; therefore, strengthening and
creating income for women reduces risk to their children. In FGD with research participants, they explained
their achievement after they engaged in the organization in reducing the risk to children. Some of their voices
were as follows:
"Before coming to this organization, I used to sell firewood. It wasn't easy to take my children to school. They
stay at home. It was difficult for me to feed them. Sometimes they don't eat the whole day. Even if they have
something to eat, it is only to fill their stomach. I was unable to change their clothes even after two years. Due
to a lack of nutrition, they are frequently seeking. However, my children are now attending their school with
materials provided by the organization. I can feed them a balanced diet from my backyard agriculture, having
gained Training in it. Now they are healthy."
In line with the above findings, Desta's (2017) study confirmed that Change in household asset position is one
of the impact indicators of the project interventions at the household level. Ownership of household assets is also
an indicator of improvement in the households' wealth. The assumption is that SOS's project services increase
households' income, and they may have the capacity to purchase household assets.
The challenges SOS faces in addressing the economic problems of the vulnerable families
The findings have shown different challenges to the organization in undertaking the IGA. Most clients who come
to the organization are seeking help. To change their motivation for work and attitude, it is necessary to provide
guidance to the clients. Changing their attitude is one challenge to the organization. What makes this challenging
for the organization is that when people seek help, they often don't want to hear about other things. For example,
if the client's need was related to a basic need, specifically food, it was difficult to suggest work because the
need had to be fulfilled first. After that provision, the following steps of IGA, such as advising, changing
awareness on work and saving, Training, and other activities, would take the next step. In line with the World's
NGOs, most share a common dilemma: a Lack of funds limits the quantity and/or quality of the vital work they
do. An unlimited need chasing limited resources is a fundamental fact of economic life in both rich and poor
countries (Viravaidya and Hayssen, 2001). The SOS IGA department workers indicated as they have faced
multiple challenges in running IGA. Those challenges are discussed below.
Challenges Related to Work Motivation of Clients
IGA department workers explained that the organization is facing challenges related to the lack of work
motivation of clients. As previously discussed, most clients who come to the organization are jobless, dependent
on a family member's income, or beggars. Most clients assume that the organization has a responsibility to help
them throughout their lives. This kind of assumption comes from the thought that, while the donors of the
organization were foreigners and the organization didn't face financial problems. For this reason, some clients
are not willing to work. Changing the client's attitude is a significant challenge for the organization.
The study confirmed that clients coming to the SOS office face various problems, including health-related and
economic hardships. After they recover from their problems, the IGA department facilitates their joining one of
the credit and savings associations within the organization. Joining the association helps clients save money and
access capital to run a business, often in the form of a loan. However, these clients do not want to save their
money since they have no habit of saving. Thus, the organization is facing challenges related to changing its
habit of saving.
Challenges Related to Different Stakeholders
According to Batti (2014), the uncertain continuity of donor funding forces an NGO to operate from project to
project, making it challenging to design and expand project activities to improve the quality of services.
However, the common mistake that local NGO" s make is to become overdependent on a single source of
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funding. When that source reduces or dries up, the organization struggles to generate new funding, often by the
time it is too late, resulting in compromised or terminated programs. Therefore, the task facing NGO" s currently
and in the future is and will be to explore additional mechanisms to boost financial stability without sacrificing
the mission of their organizations.
Government policies and political climate increase bureaucratic red tape for NGO" s mobilizing resources
externally. Where there is political instability, donors may either withhold funds or reduce or enforce stringent
measures. In the current study, Staff members of the IGA department and key informants explained the
challenges that the organization faces in relation to different stakeholders. Participants in the study, including
staff members from the IGA department, mentioned that government administrative units at both woreda and
keble levels are the ones that affect the effectiveness of IGA. SOS officials at Worldia town pointed out that
there is a problem in responding to the organization's requests on time. A member of the project reflected his
view as follows:
"Most of the time, I went to the kebeles for the purpose of requesting them to help us in IGA program. Our
problem is not resolved on time, and it undergoes a lengthy process. Because the staff in the kebeles are changing
their positions, our problem is not being solved on time. The case that those workers are handling is transferred
to a new employee. The new workers again began to see our case. The problem for our stakeholders in the
kebeles is that the previous employee doesn't inform the new worker who replaced their position about what they
have started. This becomes difficult for us in solving the problem of production and the place of our clients"
Similarly, the Key informant explicated that the other challenges are related to a lack of land for IGAs due to the
woreda's unresponsiveness on time. The following explanation by the informant could be an additional element
that elaborates on the challenges SOS faces in addressing the economic problems of the vulnerable families:
"The organization does not have enough places of its own, and when the organization asks the subcity, they are
not responsive. For example, the organization has planned to engage its clients in animal husbandry. This plan
was unsuccessful because the sub-city gave them a place far away from the living place of clients which was
difficult for these clients to move to this place and come to their residence area, and also it was difficult for the
clients to work at such a distance."
Challenges Related to Lack of Land
The data collected from IGA workers showed that a lack of land to build a working place for clients engaged in
the program hinders the SOS project intervention in the area. Additionally, the organization lacks sufficient
opportunities for clients to engage in various income-generating activities. For example, in the IGA program,
there is only one cooperative that is working in urban agriculture. There was a plan to engage clients in animal
husbandry, but it was not successful due to its distance from the clients' residences.
Drop Out From Training
The findings of this study also showed that there is a problem of dropping out of the Training in search of their
daily subsistence. For this reason, the trainers arrange the program of Training by half-day for the Training and
half-day for their work. Even though the trainers make the Training a half-day, the problem of dropping out from
the Training still exists. Because clients did not gain money by participating in the training. One of the study
participants from Tinfaz kebele explained his views on the rationales dropping out from trainings in such manner:
"Before engagement in IGA, most of the trainees were daily laborers. As we know, daily laborers search for and
obtain daily work in the morning. If the Training is taking place in the afternoon, the trainees may not be able
to attend because they may already have work that they have begun. Besides, the training place is far from their
residence."
It is thus possible to understand from the above statement that, even though Training given to clients on the IGA
aims to improve their knowledge and skills and help them change their lives, there is a problem of dropout from
Training by the clients, which makes the activity of IGA ineffective. Since some clients do not have a source of
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income, they cannot wait a long time for the Training in search of their daily food for themselves and their
families.
The challenges of clients in undertaking their business in IGA program
The findings point out that both personal and administrative systems are the main challenges that clients have
faced in shifting the technical and financial assistance they received from SOS for a better life. The research
participants, particularly the clients, pointed out the following as major challenges they faced in undertaking
their business through the IGA program.
Lack of Capital
The focus group discussants explored that after they started their business, they faced a lack of capital for
expanding their market in terms of both quantity and quality. They identified that borrowing from their
associations takes a long time to save. They are expected to save one-fourth of the loan they will receive from
their association. For this reason, most clients are facing a problem related to capital. The following case from a
focus group discussant in Admas Bashager Kebele may support this idea:
'I have been saving money in my credit and savings association. The IGA department workers told me that I can
take a loan from my association four times, but it takes a long time to save.' In addition to this, the challenge as
follows. The mechanism of saving and borrowing is good. But it is not easy to access a large loan in a short
period of time.'
Production Place
The study participants who are engaged in cooperative business activate mention as they are facing problems
related to the quality of their production place. In the IGA program, most clients engaged in various businesses,
either in groups or individually, are facing the problem of production. Besides, key informants pointed out that
during the rainy season, their production is exposed to damage. One member informant said 'Our production
place has to be renewed. The woreda has told us but they are not willing to renew the house for us rather, they
have told us that we have to leave the place because they are planning to give the place to another person.'
Furthermore, the members of the cooperative business revealed that the production place is not a conducive area
for producing products. In the other scenario, one research participant from 01 kebele mentioned the challenges
she has faced as follows;
“I am living in kebele house. I used to prepare 'tella' (local drink). Due of to lack of sewerage system I stop
making it. Now I have begun another income-generating activity, i.e., preparing food and 'derek enjera' (local
food), but the problem still exists. I am facing a problem with the production place, specifically the kitchen. Since
renting a house for a production place costs money, I don't have the capacity to rent one. In a single home, I
live, produce, and sell.”
Market Place
The study identified the various challenges that clients faced when undertaking their businesses. Most clients
are engaged in a pit trade on the roadside, which is part of the informal sector. Such people are facing difficulty
to smoothly running out their businesses because it is illegal to do business on roadsides, they are exposed to
police harassments; police take away their materials. The informants also mentioned that they are experiencing
a problem with a bad smell in the area where they sell their materials. The place has brought them for health
problems. Some of them are planning to change their current business and shift to other activities, such as animal
husbandry, restaurants, or coffee making, but a capital constraint is hindering them.
Disagreement among members of the cooperative
The study confirmed that disagreements and conflicts have occurred among cooperative members. The
respondents reported that there are members who do not come on time. There is a problem of punctuality and
inconsistency in attendance at workplaces. A female research participant revealed the challenge by saying, 'Oh!
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Some individuals are selfish. Members of the cooperative who are too busy with their different programs want
to be dependent on others who are working. As we gain the profit equally, we have to share the responsibility of
working equally.' Moreover, clients engaged in the IGA program explained the challenge as follows: Sometimes
our group faces disagreements resulting from misunderstandings among members. In my opinion, no one wants
to take a rest. So if our aim is to work, all of us should do it. Otherwise, it will be challenging to work together.
According to the findings of SOT (2011), Income-Generating Activities can stem from various reasons, including
weaknesses in project design, failures in implementation, and the beneficiary's inability to fully utilize the asset,
as well as changes in the external environment. Common problems include Low prices received from product
sales, marketing issues, and beneficiaries not reinvesting in assets. However, many problems encountered are
not inevitable and can be avoided if careful planning and analysis are done before the design and/or
implementation.
DISCUSSION
This study's findings broadly align with, yet also nuance, long-standing claims about the comparative advantage
of NGOs and the effectiveness of "credit-plus" livelihood models in low-income urban settings. First, our
evidence that SOS Children's Village Ethiopia expanded access to finance through savings-and-credit
associations, coupled with practical skills Training and coaching, is consistent with Suharko's (2007) and Riddel
& Robinson's (1995, cited in Daina, 2012) arguments that NGOs reach hard-to-serve groups with flexible, low-
cost services. Clients in Woldia described first-time access to revolving funds and business know-how that
enabled enterprise start-up, contributions that mirror the small-scale, participatory strengths highlighted in the
literature. At the same time, the Woldia case tempers universal claims by showing how gains hinge on enabling
conditions, secure workspace, responsive local administration, and market access, which are not guaranteed by
NGO delivery alone.
The study corroborates the literature that favors "credit-plus" over finance-only approaches. Srinivas (2015)
argues that pairing capital with skills and mentoring improves income and resilience; our participants traced
business viability to the combination of seed capitalization (via associations), Training, and continued coaching.
Moreover, the program's choice not to disburse direct individual loans, but to capitalize member-managed funds,
appears to mitigate some of the market-distortion risks Srinivas (2013) associates with NGO commercial
activities. By strengthening member institutions rather than running parallel credit schemes, SOS arguably stays
closer to its mission and reduces the blurring of charity and commerce that can erode legitimacy. Nevertheless,
our data also reveal ceilings inherent to savings-led finance: loan sizes tied to deposits constrained enterprise
growth, especially for participants with thin saving capacity. This partially contradicts expectations that micro-
loans alone unlock scale; instead, the Woldia evidence supports a laddered finance pathway where starter loans
are complemented by larger, performance-based tranches as firms mature.
The women's economic empowerment reported in this study aligns with Johnson and Rogaly's (1997) claim that
income control, skills, and participation in decision-making can shift intra-household power. Female participants
linked Training and steady earnings to heightened voice over budgeting and investment choices, while focus
groups described reduced reliance on external assistance. These narratives align with Islam and Sultana's (2005)
perspective on the empowerment potential of NGO programs for vulnerable women. Furthermore, our findings
extend this literature by associating women's income gains with indirect child-wellbeing benefits, improved
diets, school attendance, and health-seeking, despite the program's limited direct education mandate. This aligns
with Assefa's (2004) broader argument that household human capital investments accompany income
improvements, although in Woldia, the pathway is mediated through women's earnings and financial confidence
rather than school programming per se.
The study also confirms, but also specifies, the well-documented financing gap facing low-income households
in Ethiopia. Wolday (2004) notes that lack of institutional finance impedes productivity; participants here
described how savings associations filled a void left by banks. Additionally, consistent with NDA (2013),
respondents emphasized structural barriers, such as unemployment, weak market linkages, and limited safety
nets, that make IGAs attractive yet precarious. Where our findings diverge is in the operational detail: rather
than generalized "access to finance," beneficiaries stressed the importance of predictable, serviced production
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space and municipal permissions. Thus, the Woldia case suggests that capital alone is insufficient; integrated
place-based supports (e.g., serviced workspaces negotiated with kebele/woreda authorities) are critical
complements often underemphasized in national-level analyses.
On the sustainability of NGO-led IGAs, our results sit between optimistic impact claims and skepticism in prior
studies. Desta (2013) documents income diversification and asset gains, which our participants also reported
(e.g., increased savings balances, household durables). However, Getachew (2017) questions the durability of
IGA outcomes, and our evidence partially agrees: growth is capped by small loan ceilings; informal vending
invites enforcement risks; and dropout from Training, driven by the immediate opportunity cost of lost daily
wages, erodes capability formation. These frictions imply that positive short-term livelihood gains can dissipate
without structural fixes to finance ladders, market access, and time-sensitive delivery (e.g., half-day Training
was not enough to prevent attrition). In other words, our findings reconcile the apparent contradiction by showing
that credit-plus models deliver gains, but sustainability hinges on institutional and market complements outside
the NGO's direct control.
The constraints identified here align with Ethiopian studies, which point to financial fragility, limited
organizational capacity, and regulatory hurdles (Denko, 2012; Dagne, 2013). Participants described delayed or
inconsistent responsiveness from kebele/woreda offices in securing land or production space, echoing Batti's
(2014) observation that bureaucratic procedures and projectized donor funding complicate program continuity.
In addition, the scarcity of suitable sites for urban agriculture or animal husbandry limited diversification,
contradicting the assumption that enterprise choice is driven primarily by Training or credit. Rather, as our data
suggest, spatial and regulatory constraints often precede and trump capability constraints. This complements,
rather than contradicts, Lewis's (2009) caution that complex local governance interfaces mediate NGO outcomes.
on group-based enterprise, the Woldia experience confirms the mixed record reported in the literature. Sonderriis
and Zapata (2000) note that IGAs are often group-based but not always optimal. participants in cooperatives
reported timekeeping problems, unequal labor contributions, and interpersonal conflict, aligning with SOT
(2011), which highlights frequent implementation failures linked to group dynamics and weak governance. Yet,
where cooperatives received targeted support (e.g., equipment, shared infrastructure, basic governance training),
they achieved visible productivity gains and role-model status in their neighborhoods. This suggests that
cooperative success is conditional and design-dependent: governance training, transparent profit-sharing rules,
and performance-linked incentives may be as important as credit or technical skills.
Eighth, our findings shed light on a frequently underexplored barrier: the opportunity cost of capability building.
Training dropout, who occurs when participants cannot forego their daily wages, illustrates a classic tension in
livelihoods programming that is often treated as a peripheral issue in program design. While Patton (2002)
emphasizes adaptive evaluation and utilization-focused design, our evidence suggests operational remedies, such
as cash-for-training stipends, evening or modular sessions, and mobile coaching at worksites, which align
training schedules with the temporal realities of the urban poor. Without such adjustments, even well-crafted
curricula underperform.
Finally, the Woldia case invites several practice and policy implications that cohere with, yet extend, the
literature. First, a laddered finance architecture, beginning with savings-linked micro-loans and progressing to
larger, performance-based capital, would address the growth ceiling problem while preserving prudent risk
management. Second, municipal compacts that guarantee serviced micro-enterprise spaces (including water,
sanitation, storage, and legal vending points) would address the workspace bottleneck, thereby reducing
enforcement risks and health hazards. Third, formalized market-linkage mechanisms, framework contracts with
anchor buyers, participation in municipal procurement, or aggregator models, would stabilize demand beyond
ad-hoc roadside sales. Fourth, cooperative governance support and behavioral nudges for work readiness and
saving (e.g., commitment devices, peer accountability in savings groups) would strengthen the "people systems"
that make credit-plus models work. Taken together, these adjustments build on the comparative advantages
attributed to NGOs while explicitly addressing the structural constraints that the Woldia evidence brings into
sharp focus.
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CONCLUSION
This study concludes that NGO-led “credit-plus” livelihood models, such as the SOS Children’s Village Ethiopia
IGA program in Woldia City, have made significant contributions to improving the livelihoods and resilience of
economically vulnerable families. The findings confirmed that by combining access to revolving funds through
savings-and-credit associations with skill-building, technical training, and coaching, the program enhanced
participants’ economic capacity, particularly among women, who reported increased income control, decision-
making power, and self-confidence. The initiative also promoted positive behavioral changes, including stronger
saving habits, improved work motivation, and a shift from dependency to self-reliance, thereby contributing
indirectly to better child welfare outcomes.
However, the study also revealed that the effectiveness and sustainability of these gains remain constrained by
several interrelated challenges. These include limited access to working capital, lack of appropriate production
and market spaces, weak institutional responsiveness from local administrations, training dropout due to
opportunity costs, and internal conflicts among cooperative members. The results highlight that financial inputs
alone are insufficient; sustainable empowerment requires structural support in the form of timely government
collaboration, serviced workspaces, market linkages, and flexible program design that accommodates the
realities of low-income participants.
Overall, the study affirms that SOS’s integrated “credit-plus” approach is a promising model for urban poverty
reduction and women’s empowerment, but its long-term success depends on coordinated action between NGOs,
local authorities, and market actors. Strengthening institutional collaboration, adaptive training mechanisms, and
progressive financing structures will be essential to expand impact and ensure that livelihood gains become
sustainable over time.
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